Promissory note suit
sridhar pasumarthy
(Querist) 28 October 2014
This query is : Resolved
Respected Experts,
Promissory note was executed undertaking to pay the amount with interest at 18% on demand. But, on its backside, promisor wrote that amount with interest would be paid after 18 months in his own handwriting and put his signature beneath it. Promissory note was affixed with Rs.1/- revenue stamp.
Basing on the said pronote I filed the suit.
Material averments in the plaint in brief are :-
"On dt.xxxx, defendant borrowed an amount of Rs.xxxx/- from the plaintiff and executed the suit promissory note in favour of the plaintiff in his own handwriting promising to repay the same with interest at 18% p.a. either to the plaintiff or to his order, on demand. He also endorsed on the backside of the said promissory note in his own handwriting that he would repay the amount after 18 months."
Now, defendant filed his written statement denying the signature and handwriting on the promissory note as well as of the endorsement on the backside of the promissory note is not that of him and that it was fabricated under certain circumstances by the plaintiff.
That material aspect in the written statement is "The suit promissory note is not a demand promissory note and it is a promissory note payable otherwise than on demand by virtue of endorsement on backside of promissory note. As such, according to Article 49 (2) of Schedule I of Indian Stamp Act, stamp duty is insufficient and hence it is not admissible in evidence as per Section 35 of stamp Act and hence, the suit is liable to be dismissed on this sole ground.
Now my doubts are :-
1. What is the effect of words written on the backside of the promissory note particularly with respect to deciding stamp duty?
2.Whether the words written on the backside of promissory note are part and parcel of the suit promissory note or can it be termed as different transaction?
3. Is there any way to get the suit promissory note marked without any objection?
I am very anxious of knowing the answers as you all knew well that suit will be dismissed if promissory note is not marked.
Pls clarify my doubts. Thanks in advance.
Rajendra K Goyal
(Expert) 29 October 2014
No reply to regular professional query.
V R SHROFF
(Expert) 29 October 2014
No reply to regular professional query.
ajay sethi
(Expert) 29 October 2014
unconditional leave to defend would be granted by court
sridhar pasumarthy
(Querist) 29 October 2014
Though it is a professional query, I have not posted out of academic interest. I am appearing for plaintiff in the said suit and the problem really arose in the course of trial.
Pls don't ignore it. I really hope thar I can find solution to my problem in this forum
DEFENSE ADVOCATE.-firmaction@g
(Expert) 29 October 2014
Even if it is a professional query still it raises real legal issues.
FIRSTLY the document comes from your custody so all its writing are binding on you.
SECONDLY Due to conditions it is no more promissory note.
THIRDLY No need even for defendant to submit any application or WS.
Lack of proper stamp duty and lack of proper promissory notes issues can even be raised by him for rejection of plaint.
Anand Bali Adv.
(Expert) 29 October 2014
Sec 4 of the Negotiable Act deals with the Promissory Notes and states as " A promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument". So it must be in writing, promise to pay, certain money, unconditional, to certain party. Every endorsement made on the back of the instrument will carry the same effect as a part and parcel of the wordings of the instrument only.
Now come to the question of the stamp duty , in fact one rupees stamp duty affixed on the instrument denotes tha fact that the parties were much intended to make it a legally enforceable instrument however because of their ignorance of the legal aspect of the stamp duty to be affixed made them to put an lessor stamp duty on it. Here the intention of the party is the main point to be pulled up first and in case it is established that the intention was right and party was well intended to pay the sum of money as per the Promissory note at the time of it's execution court can direct to repay the balance amount of the stamp duty with the penalty on it and then get it enforced with the cost against the executor of the Promissory note. You can contact me for guiding and solving the case of recovery like this.
sridhar pasumarthy
(Querist) 29 October 2014
@ Sri Anand Bali
Sir, Payment of Deficit stamp duty and penalty is barred in case of promissory notes under Section 35 of Indian Stamp Act.
Could you pls cite any authority that "Every endorsement on backside of instrument will carry the same effect as a part and parcel of wordings of instrument".
T. Kalaiselvan, Advocate
(Expert) 31 October 2014
Promise to pay must be unconditional:
A conditional undertaking destroys the negotiable character of an
otherwise negotiable instrument. Therefore, the promise to pay must not depend upon the happening of some outside contingency or event. It must be payable absolutely.
